Technology
The US government confiscated $1 billion in bitcoin from the Silk Road dark web platform.
Earlier this week, the bitcoin world was stunned when a digital wallet holding around $1 billion in bitcoin — thought to be proceeds from the now-shuttered dark web opioid auction Silk Road — was drained by an anonymous person. Today, the persons responsible for sweeping up the funds have exposed themselves: it was the US government.
The Department of Justice revealed on Thursday that it had confiscated the contents of the wallet as part of a civil forfeiture lawsuit against the Silk Path. The government said it had seized some 70,000 bitcoins with the assistance of an anonymous hacker, whose identity is known to the government but merely referred to as "Person X" in court records.
"Person X" is said to have compromised the payment system of Silk Road some time in 2012 or 2013.
The government claims that the developer of the Silk Road, Ross Ulbricht, who is currently serving a double life sentence plus 40 years for his work on the web, threatened person X for the return of the cryptocurrency, but the anonymous hacker denied. On November 3rd, Person X decided to forfeit Bitcoin to the U.S. government and helped to move the currency. It is not clear whether a person X has been prosecuted or if their cooperation has been accomplished.
In a press release, US Counsel David L. Anderson praised the operation as a tremendous achievement for the department. Silk Road was the most popular online drug network of the day, Anderson said. "The fruitful conviction of the maker of Silk Road in 2015 left a billion dollar issue open. Where was the money going? Today's forfeiture lawsuit answers at least in part to this unanswered question. $1 billion of this illegal proceeds were now in the hands of the United States.
Silk Road was the most complex and comprehensive illegal sector on the Internet, the Department of Justice claimed, running between 2011 and 2013 before the FBI took off. The U.S. government reports that the website produced some 600,000 bitcoins in commissions over this time. Approximately 175,000 of these were confiscated after Ulbricht was arrested and the website closed in October 2013.
The Department of Justice would not specify what it wants to do for $1 billion of freshly seized bitcoins, although in the past it has auctioned off similar blockchain hauls. Such transactions are processed like any other civil forfeiture, notes The Wall Street Journal, with proceeds held by the Government and added to the budget.
